California Tax Exempt Forms: FTB 3500, 3500A, and CDTFA-230

California uses two different tax exempt forms depending on what you’re trying to avoid paying. For state income tax exemption, nonprofits file Form FTB 3500 or the streamlined Form FTB 3500A with the Franchise Tax Board. For sales tax on inventory bought for resale, businesses issue Form CDTFA-230 to their vendors. The forms serve different purposes, go to different agencies, and have different eligibility rules.

FTB 3500 or FTB 3500A: Which One to File

Form FTB 3500 is the full application for California income tax exemption. Any organization can use it, and organizations without a federal determination letter must use it.¹ Processing currently averages about six months.²

Form FTB 3500A is the shorter submission, available only if you already hold a federal determination letter under IRC Section 501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6), 501(c)(7), or 501(c)(19). Organizations whose California exemption was previously revoked cannot use the 3500A and must file the full 3500 instead.³ Processing averages around four months.²

Neither form carries a filing fee. California eliminated the $25 application fee for Form FTB 3500 effective January 1, 2021, under Senate Bill 934.⁴

Without a determination letter from the FTB, your nonprofit corporation is taxed exactly like a for-profit corporation and owes the $800 annual minimum franchise tax every year.⁵ Filing the application is not optional if you want the exemption.

What Goes in a Form FTB 3500 Package

A Form 3500A package is simple: the completed form plus a copy of your federal determination letter. Form 3500 requires more, and the exact document list depends on how your organization is structured.¹

Incorporated organizations submit articles of incorporation and all amendments stamped by the California Secretary of State, plus bylaws.
Unincorporated associations submit a constitution, articles of association, or other governing document signed by the board, plus bylaws.
Trusts submit the trust instrument and any amendments, plus the federal exemption determination letter.
LLCs submit articles of organization stamped by the Secretary of State and the operating agreement. Foreign LLCs also need Form LLC-5, the Application to Register a Foreign LLC.

Every applicant must include financial data covering receipts and expenses from all sources. If your organization has been operating for at least a year and already holds federal exempt status, you can attach the last three years of federal Form 990 returns. If you file the federal 990-N e-Postcard, you must prepare your own detailed financial statement instead, because the e-Postcard contains no financial data. New or not-yet-active organizations submit a proposed budget.¹

Check your articles of incorporation for two clauses before you file: a purpose clause limiting the organization to exempt activities, and a dissolution clause directing remaining assets to another exempt purpose on dissolution. Applications are rejected when the governing documents are missing either one. If the FTB needs more during review, it sends a written request, and the processing clock pauses until you respond.

Who Qualifies for California Income Tax Exemption

California Revenue and Taxation Code Section 23701 is the framework. An organization must be organized and operated for nonprofit purposes under one of the listed subsections, apply to the Franchise Tax Board, and receive a formal determination letter.⁶

The most common category is Section 23701d, covering religious, charitable, scientific, literary, and educational organizations. A 23701d organization cannot distribute net earnings to private shareholders, cannot devote a substantial part of its activities to lobbying, and cannot participate in political campaigns for or against any candidate.⁷ Other subsections cover civic leagues, social clubs, fraternal societies, labor organizations, and business leagues, each with its own operational rules.

Annual Filings After You’re Approved

The determination letter is not the finish line. California requires annual filings, and missing them can send you back through the full Form 3500 process.

FTB Form 199 or 199N

Most exempt organizations file either Form 199 (Exempt Organization Annual Information Return) or the electronic FTB 199N (California e-Postcard) each year. Organizations with gross receipts of $50,000 or less file the 199N; those above $50,000 file Form 199.⁸ Churches, religious orders, political organizations, and certain government-controlled entities are exempt from this filing. Late returns carry a penalty of $5 per month up to $40, and ignoring the requirement entirely puts your exempt status at risk.⁵

Federal Form 990 Series

At the federal level, you file one of the Form 990 series returns. Gross receipts of $50,000 or less: Form 990-N (e-Postcard). Gross receipts under $200,000 and total assets under $500,000: Form 990-EZ. Above those thresholds: full Form 990. Private foundations file Form 990-PF regardless of size.⁹ Miss three consecutive federal filings and the IRS automatically revokes your exemption under IRC Section 6033(j), effective the original due date of the third missed return.¹⁰ Since Form 3500A depends on a valid federal determination letter, losing federal status can also cost you the streamlined California path.

Attorney General Registration

Charities that solicit or receive donations in California register separately with the Attorney General’s Registry of Charities and Fundraisers. Initial registration uses Form CT-1 with a $50 fee. Annual renewals use Form RRF-1 along with either Form CT-TR-1 or the organization’s IRS Form 990.¹¹ This is a different agency from the FTB, and plenty of organizations miss it.

If your California exemption is revoked, the FTB taxes the organization as a for-profit corporation, including $800 minimum franchise tax for every year the exemption was absent, with penalties and interest. Reinstatement requires filing all missing returns, paying everything owed, and submitting a new Form FTB 3500 with full documentation.⁵

Form CDTFA-230: The Resale Certificate

Form CDTFA-230 is a different animal. It is not an income tax form and has nothing to do with the FTB. It is the general resale certificate issued through the California Department of Tax and Fee Administration, used by a business to buy goods without paying sales tax when those goods are intended for resale in the regular course of business.¹²

To issue a resale certificate, you generally must hold a valid California seller’s permit. There is a narrow exception for buyers who sell only non-taxable items (such as food products for human consumption) or who make no sales in California; those buyers can still issue a certificate but must explain on the form why they don’t hold a permit.¹³ The certificate only covers items that will be resold as-is or built into another product. Equipment used in business operations, office supplies, and anything for personal use do not qualify.

The form itself is a short PDF on the CDTFA website.¹⁴ You complete it with your seller’s permit number, the business name and address as shown on the permit, a description of the property being purchased and how it fits your resale inventory, and a signature from the purchaser, an employee, or an authorized representative. You present it to the vendor at the time of purchase.

If you’re the seller receiving a certificate, verify the buyer’s permit number before accepting it. The CDTFA runs an online search tool and a toll-free automated phone line at 1-888-225-5263.¹⁵ A seller who accepts a properly completed certificate in good faith is relieved of liability for the sales tax on that transaction, even if the buyer later uses the property for something else.¹³ Keep copies on both sides. California requires businesses to retain tax records for at least four years, and the certificate is the seller’s primary defense in an audit.¹⁶

What Happens If You Misuse a Resale Certificate

Using a resale certificate to buy something for personal use or to dodge tax is costly. The buyer owes the tax that should have been paid plus a penalty of 10 percent of the tax or $500, whichever is greater, for each improper purchase, and can be charged with a misdemeanor under Revenue and Taxation Code Section 6094.5.¹⁷ If the buyer also fails to report and pay use tax on the items, add 10 percent for negligence or 25 percent for fraud. On a single transaction, a misdemeanor charge, the base penalty, and a fraud penalty can stack together quickly.

1
Franchise Tax Board. 2025 Instructions for Form FTB 3500 Exemption Application Booklet
2
Franchise Tax Board. Tax News November 2025
3
State of California Franchise Tax Board. 2025 Instructions for Form FTB 3500A – Submission of Exemption Request
4
Franchise Tax Board. Tax-Exempt Organization Application Fee and Filing Fees Eliminated
5
Franchise Tax Board. FTB 927 Publication Introduction to Tax-Exempt Status
6
California Legislative Information. California Code Revenue and Taxation Code RTC 23701
7
California Legislative Information. California Code Revenue and Taxation Code 23701d
8
Franchise Tax Board. Annual and Filing Requirements – Charities and Nonprofits
9
Internal Revenue Service. Annual Electronic Notice (Form 990-N) for Small Organizations FAQs: Who Must File
10
Internal Revenue Service. Automatic Revocation of Exemption
11
State of California Department of Justice. Forms – Charities
12
California Department of Tax and Fee Administration. Sales for Resale (Publication 103)
13
California Department of Tax and Fee Administration. Regulation 1668 – Sales for Resale
14
California Department of Tax and Fee Administration. CDTFA-230 General Resale Certificate
15
California Department of Tax and Fee Administration. Sales for Resale (Publication 103) – Valid Resale Certificates
16
California Department of Tax and Fee Administration. Sales and Use Tax Records (Publication 116) – Retaining Records
17
California Department of Tax and Fee Administration. Regulation 1668 – Sales for ResaleCDTFA-230 General Resale Certificate